In the previous chapter, I calculated the incremental costs to
different nations and groupings of nations arising from the
carbon abatement scenario and protection against sea level rise.
In this chapter, I redistribute these incremental costs based on
historic contribution to climate change and ability to pay. As
might be expected, the North is obliged to pay substantially more
than it would if it ignores its historic contribution and its
greater ability to pay than the South. And unless the South's
cost is reduced to its obligation-to-pay, it could pay much more
than it should - from 58 to 90 per cent more according to the
following analysis.

Redistribution in accordance with this indice is then compared
with the pragmatic distribution rule known as the UN scale of
payments, and some benchmarks. As the obligation-to-pay index
does not diverge much from the UN scale of payments, the latter
could be very useful in judging national claims for exemption
from the former in the climate change context.

Next, I examine how the substantial funds involved might be
collected, generated, and transferred by a carbon tax, traceable
permits, or sale of abatement services. This analysis shows that
the carbon tax and traceable permits are feasible instruments to
achieve the requisite financing in the South, but that the sale
of abatement services would likely only supplement the former two
mechanisms. Finally, I direct the reader to a summary of the
major uncertainties that affect each of these links in the
logical chain presented in this analysis.

'Obligation to pay' (OTP) is a composite indice based on two
constituent measures 'ability to pay' (ATP) end 'historic
contribution to climate change' (HCCC). The indice enables the
issue of who should pay (who created the problem and who can
afford to pay for the cleanup) to be separated from where
abatement should be conducted (the cheapest sites). Here, this
concept is used to determine the distribution of the costs of
abatement and coastal protection that were calculated in the
previous chapter, at high, medium and low abatement cost curves.
First, I will briefly review the conceptual components of
'obligation-to-pay' as advanced in Chapter 4.

This criterion is useful because it clearly shows who has
gained economically from past pollution of the atmosphere. It
also identifies who can afford to shoulder the burden of
greenhouse gas abatement in the future. This ATP index does not
include any special weighting for populations who are especially
at risk from climate change, such as those of developing coastal
and island states.

The second index that is used to determine overall obligation
to pay is historic climate change contribution (HCCC) defined for
a given nation as:

HCCC = national cumulative GHG - [Population x NDTHOLD]

where:

GHG = greenhouse gas emissions integrated contribution to
atmospheric warming using a 100-year time horizon from year of
emission. Here, carbon dioxide from fossil fuel usage is taken as
a proxy for greenhouse gas emissions;

NDTHOLD = a threshold 'natural debt' defined as the cumulative
per capita emission that is attributable to the universal human
right to an equal portion of atmospheric absorptive services such
as the carbon sink. Any emission above this per capita level is
treated as an excess borrowing that counts in the HCCC.

The HCCC of a given nation is weighted relative to its 1986
adult population on the grounds that current populations should
carry the burden of ancestral cumulative damage and that national
responsibility for climate change is proportional to national
natural debt.

As was argued in Chapter 4, the HCCC is an important ethical
and political concern that should be reflected in determining
obligation to pay. Some critics contend that this criterion
places too much emphasis on moral responsibility and not enough
on current emissions. However, allowing past decision-makers to
avoid liability for their historical contributions to cumulative
and irreversible environmental degradation such as climate change
fails to provide current decision-makers with an incentive to
protect the rights of future generations. The current generation
of leaders cannot disavow its obligation to pay off its natural
debt from the immediate past at the same time as it claims to be
adopting the principle of intergenerational equity. Moreover, the
political leaders of the South are not about to let the North
occupy all the global atmospheric commons without first obtaining
significant compensation - a point stressed repeatedly by the
Group of 77 in the negotiations over the Convention. A
transparent, quantitative index of historical responsibility will
facilitate greatly the ongoing negotiations over protocols on
this issue. It is therefore the necessary starting point of
meaningful bargaining over this issue, even if political-economic
power ultimately elbows aside much of the moral imperative
represented by the HCCC index.

These indexes can be combined into a total obligation-to-pay
indice by either multiplication or addition. Each index could be
weighted, for example, from concern with equity. Here, however,
the indexes are simply added without weighting. Of course,
politics would determine how the indexes would be combined in an
actual negotiation. As both indexes give similar distributions of
responsibility, the selection of one rather than both, or the
best combination of the two, would be a pragmatic political
question.

In Table 6.1 and Figure 6.1, I show the per centage
distribution of national and aggregate obligation to pay. The
South's obligation to pay is about 7 per cent, the North's about
73 per cent, and the East's about 20 per cent. With this indice,
the incremental costs calculated in Chapter 5 can be
redistributed between nations in accordance with their global
obligation to pay, a procedure followed in the next sections.

If the obligation to pay indice were adopted in a protocol to
the Climate Change Convention, then it should be recalculated
periodically (say every five years) to reward those who have
decreased their historic greenhouse gas contribution relative to
projections; and to penalize those who have increased their
historic greenhouse gas contribution relative to projections. A
similar adjustment to obligation-to-pay should be made for each
nation's achieved GNP per capita growth rates relative to those
projected in the initial calculation of a nation's obligation to
pay.

Table 6.1 Obligation to pay, combined index

Country

% of total

% of group subtotal

North

United States

US

37

50

Germany (United)

UG

8

11

Canada

CA

3

4

Belgium

BE

1

1

United Kingdom

UK

6

8

France

FR

4

6

Japan

JAP

8

10

Italy

IT

3

4

Australia

AU

1

2

Greece

GR

0

0

Netherlands

NE

1

2

Spain

SP

1

2

Portugal

PO

0

0

Turkey

TK

0

0

Subtotal, North

NO

73

100

'East'

Soviet Union

SU

16

77

Rest of East Europe

EE

5

23

Subtotal, East

EA

20

100

'South'

China

CH

1

22

India

IND

0

0

Indonesia

INDO

0

0

Rest of South

RoS

5

78

Subtotal South

SO

7

100

TOTAL

WORLD

100

National obligation to pay = (% world ability to pay, at
threshold income of (1986) US$1,800/ capita) + (historic
contribution of cumulative emissions, 1950-86) - (1986 population
(national) x natural debt threshold of 10 tonnes of carbon per
capita (1986))

At first sight, these adjustments appear to increase the
relative obligation-to-pay of the developing countries (which
will rapidly increase their share of historic contribution to
atmospheric carbon loading, and their ability to pay) and reduce
the obligation of the developed countries (which will have an
ever smaller share of the accumulated carbon contribution to the
atmosphere and likely a lesser GNP growth rate than in the
South). In reality, both adjustments would be sensitive to the
effect of population growth on the 'basic needs' allowance in the
obligation-to-pay indice. Therefore, the 'redistributive' impact
of regular recalculation of the obligation-to-pay indice is
indeterminate. High population growth in the South, for example,
would increase its permitted 'basic needs' emissions that would
not count toward its obligation to pay. It could (depending on
the impact of population growth on GNP growth) also keep per
capita income in the South below the basic needs threshold per
capita income (US$1,8001capita) that determines ability to pay in
this study.

If the emissions index in the obligation-to-pay indice is
reanalysed using this study's projected population in and
cumulative emissions up to 2025 for the North, East and South,
then the North's total obligation to pay (updated for cumulative
contributions from 1950 all the way to 2025) would increase by
about 7 per cent, the East's by about 8 per cent, and the South's
by about -14 per cent relative to the distribution of the
obligation-to-pay indice in 198617 (58, 23, and 18 per cent
respectively).

Conversely, if the basic needs allowance in the emissions
component of the obligation-to-pay indice is pegged to its 1986
level (that is, a 1986 population level is used rather than the
2025 figure), then the shift in relative responsibility due to
the increases in cumulative contribution from 1987 to 2025 is
from the North (-5 per cent) to the East (+1 per cent) and the
South (+4 per cent).

How population growth is treated in the two indexes that
constitute the obligation-to-pay indice is therefore critical to
the impact of its periodic adjustment. The choice of which
population to use is political, and there being no 'right'
answer. In any case, whatever its direction, the overall
redistribution of obligation-to-pay arising from periodic
adjustment is relatively small, even after thirty years of
additional emissions. I therefore proceed using the current
estimate of the obligation-to-pay index stated above in
redistributing incremental costs.